There are a lot of reasons to leave Robinhood and move to another investing platform. In the last week or two the reasons have increased and more and more people are abandoning Robinhood for good reasons.
Reasons To Leave Robinhood
When I previously posted about starting a dividend portfolio on Robinhood, I was very excited about a platform that made investing feel so fun. However, over time I’ve discovered a lot of reasons why Robinhood App is subpar for investing as well as personal reasons too.
Some reasons to leave Robinhood based on their failures:
- Outages on days with big volume which have led to people losing hundreds and thousands of dollars
- Lots of bugs and glitches in what shows especially on days where trading volume is very high
- Customer service is very limited and if you have a problem you can’t get someone on the phone or email (you can just yell into the void on Twitter)
- There have been issues with users being hacked and accounts looted
- Robinhood has been sued and will be sued again
- There is a lack of transparency on how they operate and make money off of the users which does not match their stated company ethos
- During the Gamestop / short selling debacle of January 2021, they took action limiting what users could purchase which manipulated the price of stocks in a downward manner
- The lack of transparency and disclosures from Robinhood in multiple cases pits them agains their users which means you aren’t getting the best deal or service
Some reasons to leave Robinhood based on my investing style as a long term investor:
- They don’t offer many beneficial investing account types including IRAs, HSAs, 529s etc
- Because they don’t offer those account types you can only open a taxable brokerage account meaning you will pay more taxes on gains unnecessarily
- They don’t offer access to buy mutual funds or bonds or several other asset types that you may want in a portfolio to diversify
- Focus is on stock picking, options, and other riskier investing styles which can lead beginners into trouble
Those are reasons to leave Robinhood as your investing platform. Luckily it is easy to transfer your stocks out of Robinhood and move to a better brokerage that offers more account types, asset options, and superior customer service.
How To Transfer Stocks Out Of Robinhood
Leaving Robinhood is easy and can be done by opening another account at a different brokerage and then trasnferring your stocks.
You do not have to sell your stocks to leave Robinhood!
You can sell some if you want, but remember that for any profits / gains you will need to pay capital gains taxes. If you’ve held the stock less than a year that tax rate can be substantial.
Robinhood even has a guide to how to transfer stocks out of your Robinhood Account.
Some important things to note about transferring your stocks out of Robinhood:
- Robinhood supports partial and full outbound transfers of your stocks.
- Once you transfer all assets out of Robinhood, they will close your account.
- There is a $75 fee to transfer assets out of Robinhood to another brokerage.
The process is pretty simple and most major brokerages can help you walk through it as well. The instructions on how to initiate the transfer from Robinhood are quite simple since the new brokerage handles most of the actual work:
To begin the process, you’ll need to contact your other brokerage and have them initiate the transfer. They’ll submit the transfer instructions to our clearing partner to transfer over your assets and funds.
If you transfer all of your assets to another brokerage, we’ll close your account.
Please make sure you initiate an ACATS (Automated Customer Account Transfer Service) transfer. Please don’t request stock delivery using any method other than ACATS, including DTC and transfer agent transfers.
You might need to give the other brokerage your Robinhood Securities (RHS) account number. You can find this information in your mobile app
1. Tap the Account icon in the bottom right corner.
2. Tap Investing.
3. Your account number will be at the top of your screen.
You may need to reference a DTC number for your transfer. Robinhood’s DTC number is 6769.
After you initiate a full transfer, your account will be restricted to ensure the transfer is processed smoothly. You won’t be able to make any trades on the assets being requested, including options in the underlying asset, while the transfer is in process, but keep in mind that you’ll still own the securities or positions during this time, and they’ll update in the app to reflect their current market value.
You can use any brokerage and many have advantaged above Robinhood. The three brokerages I personally use and like to recommend to people are:
- M1 Finance (referral link. you’ll get a bonus signing up)
Those are the platforms I’ve ended up with and plan to stick with long term. Of note, if you are trading then M1 Finance will not be for you since it is geared toward long term investing rather than trading.
Why I Left Robinhood
I decided to leave Robinhood as an investing platform in November 2019.
I left for several personal reasons and issues with the platform as well. As time has gone on Robinhood has only revealed even more negative issues for users.
Personally I left Robinhood for a several reasons:
- Has outages on big volume investing days
- Has lots of bugs and glitches especially when things get busy
- Customer service there is almost non-existent and you can’t call them
- You can email but you can’t expect an answer
- Users have had issues with hacking and looting of accounts
- I’m not a trader and the app encourages moves that aren’t the best and can be based on emotion
- The gamification of investing on the app is fun but also encouraged me to act too quickly and not make the best decision
I originally downloaded Robinhood to open an account to buy stocks because it looked fun, it’s easy to use, and a lot of other YouTubers used and loved it. Yes, even I buy or subscribe to things because of channels I watch.
I also had the idea of using this portfolio of making it public and sharing what stocks I’ve bought and why. However, after months of use I realize … I just don’t want to do that. I’m not great at picking stocks, I’m not confident enough to recommend them.
I can talk all day about index funds and ETFs but individual stocks still trip me up. I’m not great and analysis and honestly I’m too emotional about buying stocks.
Robinhood has a ton of bugs and outages. Any time there is high volume traffic during a day the app gets glitchy and has hiccups and sometimes just doesn’t work at all. On the biggest days of the past year with stocks Robinhood basically just shut down and screwed over a lot of people and Robinhood did not seem to care about those people.
Yes, its a new app and they are going to figure it out but I’ve decided if I want to put a lot of money into a platform, it’s not one that feels like it is still working out the kinks.
So while there are some benefits to Robinhood and I love a lot of the little features and how easy it is to use… it’s just not enough for me to stick with them long term and build a large portfolio there. Since I’m planning to invest heavily after paying off debt I wanted something more stable that better fits the style of investing I actually like to do.
I also personally just want to consolidate. I have multiple accounts at multiple companies and frankly I don’t have time or desire to keep checking multiple portfolios and making sure nothing is on fire or needs to be adjusted. Robinhood is only a small percent of my overall investments yet it’s still something that I feel like I have to give too much attention. This whole experience has confirmed that I’m truly a hands off inventory who likes to make things easy and passive. That means I like buying index funds and ETFs where someone else I trust is doing the stock picking not me.
With that investing strategy in mind, I don’t need an app like Robinhood in order to consistently invest in those types of investments. I don’t regret using Robinhood or regret recommending it to people because in many ways it’s still a great option and really did change the investing landscape with no commission fees. But for this point in time.. it’s not right for what I want to do.
I decided to consolidate and to sell those stocks where I’d made a poor choice and had lost money. I also sold some where I didn’t want to hold the stock long term but the gains were not that high and were cancelled out by the losses on others. This money was used to help me pay down debt and get closer to debt freedom. I planned to move the remaining stocks I wanted to hold long term out of Robinhood to another account at a more reputable broker.
Sometimes you want to try out new things and investigate what is seemingly working for others and that is totally ok! It’s not a bad thing to stray from what you know and learn and see if you like another strategy or plan with your money.
In this case, I didn’t like it as much and I’m going to go back to the strategy and investing plan I’m comfortable with and honestly, love the most. I’ll be sticking to my plan and sharing more details with you in the future especially as I start to pour more money into investments to hopefully build a future or financial freedom for our family.
As always, thanks for watching, reading, and supporting!
Mary is the founder of Pennies Not Perfection where she shares her journey to build wealth through online income. She quit her day job in 2021 after she paid off her debt and doubled her 9-5 salary.
Mary's favorite free financial tool is Personal Capital. She uses their free tools to track net worth and work toward to financial freedom.
Her favorite investment platform is M1 Finance, where she built a custom portfolio for free with no fees. She shares her portfolio growth and savings progress every month on YouTube.